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glowend writes "I just listened to a fascinating podcast with Valve's economist-in-residence, Yanis Varoufakis, about the unusual structure of the workplace at Valve where there is no hierarchy or bosses. Teams of software designers join spontaneously to create and ship video games without any top-down supervision. Varoufakis discussed the economics of this Hayekian workplace and how it actually functions alongside Steam — a gaming platform created by Valve. I kept wondering: assuming that his description of Valve is accurate, can this model work for other tech companies?"

The managers are not the only problem (albeit usually the largest one). Incompetent or unmotivated "craftsmen" (engineers, artists,...) are the second problem as they will either try to become managers themselves or be unable or unwilling to temporarily assume management functions. And the third problem is anybody with a lust for power, although that often coincides with being incompetent.

I think the problem is not managers/engineers/etc per se. The problem is not the job function so much as the deadwood doing the function. I have known useless engineers, and I have known useless managers, and I have known useless administrative staff. The problem is the people: they are no good at their job and don't care to get better. The problem is, those people need to eat and pay their bills, so they have to have a job somewhere.I think a large part of society's ills could be cured with something akin to a basic income [wikipedia.org] that basically pensions off people who don't want to be there so that those of us who do - who are highly motivated and capable - can get on with things. Let the manager who wants to spend all day fishing do exactly that. I want to spend all day building robots and educating students. The work will get done, and our industrial processes can produce enough for everyone.

The work will get done, and our industrial processes can produce enough for everyone.

I don't think that's really true. I sure wouldn't be doing that work. I would be doing some work, but it would be work for me, that I enjoy. The world would look like the open source landscape at best. At worst we'd have no garbage collectors.

You haven't really thought it through or you don't understand. The garbage collector would get paid for doing his job, which would be separate from the basic income. Maybe the price of garbage collection goes up to pay the collectors more, but someone would certainly do it.

Some people enjoy the job of garbage collection. Really, you'd be surprised. In a documentary on waste management, there was one garbage collector who, once a year, would go on a foreign holiday. And he'd arrange with the local garbage collectors to do a route or two with them. Around his lounge there were photos of him with various collection crews around the world.

Whatever the job. No matter how much you might think it's awful, there are people that enjoy that job. Factory working. Retail. Even sewage wor

The father of a friend of mine growing up had a job in garbage collection. First it paid a hell of a lot better than I expected. The other thing about it is back then they would take virtually anything you put at the curb. His route went through a relatively affluent part of town. People threw out an incredible amount of good stuff. He was the first person I knew who had a big screen TV and a surround sound system. Somebody had spilled paint on the cabinet and just thrown the whole thing out. He picked i

The work will get done, and our industrial processes can produce enough for everyone.

I don't think that's really true. I sure wouldn't be doing that work. I would be doing some work, but it would be work for me, that I enjoy. The world would look like the open source landscape at best. At worst we'd have no garbage collectors.

Thats the point, you would be living on basic income in a trailer park doing whatever it is you like to do. Smart capable people would do useful stuff and move civilization ahead. This is one of the scenarios of post scarcity world (goods/food manufactured by automatons leaving people unemployed).
Plenty of examples in Science fiction literature. From the top of my head I can remember a short story where mandatory state IQ tests determined class you belonged to. Lowest class was forbidden from working and was provided for, higher classes were forced to work to utilize their mental capacity. Story was about a hacker helping people cheat IQ tests so they could classify as higher class and work. Incidentally that hacker had to pay another hacker to hide his own high IQ so he didnt have to work:). I forgot the name of the story:(

If you're talking about welfare for all, working or not, then the question is where that money comes from.
Is there some endless hole of wealth that is supposed to prop us up? I understand the intent, but the mechanics of this idea have either been very poorly explained or won't work any better than a traditional ponzi scheme.

I disagree -- your argument is essentially the same as the RIAA/MPAA: "Unless we protect music, artists won't get paid and they won't make music anymore". Which is complete & utter bunk, because plenty of artists make music without ever making a cent in profit. People may not continue to do what they currently do -- in fact, a great many (myself included) would not. But we WOULD find things to do instead that we enjoy a lot more, and are probably much better at.

I don't know about capitalism's fears (does an ism have fears?), but probably the two major free market economists in the 20th century were for a guaranteed basic income - Hayek and Friedman. Charles Murray recently came out with a book on it.

Ending the regulatory/welfare state is the greatest fear of government apparatchiks and central planners.

The CxOs are nothing without the engineers who design their products, and the engineers are nothing without workers to build the products they design. And managers generally function to keep everybody on track. Ever worked on a dev team with no manager? I have, and nothing got done until they finallt hired a manager.

There were numerous issues, but it all boiled down to authority. We needed someone with the authority to reprimand and eventually fire the guy who made threats of physical violence during code reviews and went on long, loud racist tirades at least 3 times a day (seriously, this happened). We needed someone with the authority to tell the analysts that their specs were self-contradictory and filled with jargon that, upon questioning, they could not define. We needed someone with the authority to ask the us

If they stay at home instead of working, then they aren't motivated by the money they could earn.

Capitalism runs on the assumption that people are motivated by the marginal differences in income between jobs. This continues to operate under the universal basic income scenario. Otherwise, there can only be intra-industry salary competition and never inter-industry.

This reminds me of an economist's thought experiment -- let's say there are two widgets, a premium one for $200 and a knock-off for $100. The premium one is legitimately better, so you intend to buy that one, but the knock-off would do and if you were tight on money you could get by with that. You will only ever need one of these widgets.

You get to the store, and actually find that there's an ill-conceived doorcrasher sale. Widgets are all uniformly $100 cheaper. The knock-off is now free and the premium one is now $100. What do you get now?

A lot of people instinctively say they'd take the knock-off because it's free, but if you're a rational actor you should stick with your original choice, because the difference between the knock-off and the premium one, both in terms of costs and benefits, has not changed at all, whatsoever.

In reality, people aren't rational, so they will shift to the knock-off sometimes. But we also aren't talking about a one-day-only sale. People want luxuries, so they'll work.

There have been some positive experiments with this in the past (eg. Canada tried http://en.wikipedia.org/wiki/Mincome [wikipedia.org] and came out with some pretty positive results, although they knew this was not permanent so that could affect behaviour) and there are lots of places that have a partial basic income guarantee without imploding, though long term full basic income guarantees in otherwise-capitalist-leaning countries are scarce. An experiment in a poorer nation actually registered an increase in economic activity: http://www.bignam.org/BIG_pilot.html [bignam.org].

I have no doubt there are downsides to this, or even really advocating for it, I'm just trying to counter the "dumbest idea" that you put forward. Like most economic ideas, it's not obviously stupid or obviously smart, because just about nothing about economics is simple.

A lot of people instinctively say they'd take the knock-off because it's free, but if you're a rational actor you should stick with your original choice, because the difference between the knock-off and the premium one, both in terms of costs and benefits, has not changed at all, whatsoever.

This is not true. The utility of money is an s-curve, so the difference of utility between $100 and $200 is less than $0 and $100.

Think of this way: there's a huge difference between being broke and owning 1 billion dol

Capitalism, communism, socialism: all the financial models and systems are broken now by a thing not anticipated by their models: plenty.

When food is limited it makes sense to limit it to those who contribute to the commonweal. When it is so plentiful that we plow half of it back into the ground to keep the price up, and throw half of the rest away - not so much. Likewise with shelter, clothing, all the basic needs. It makes sense to leave some homeless in the winter to freeze to death when there is no room in built homes - but of that now there is no lack. Money is just a proxy for production units.

We have at some estimates 40% of our able population idle for the simple reason that they're not required to produce what we need. That is a serious problem because if we don't figure it out when that figure hits 50% they will be the majority. It's also an opportunity, as these folk are quite capable and eager to produce. The one who figures out how to empower them to produce a social good will be canonized.

I would argue that food scarcity isn't increasing, but our current situation comes from a variety of problems:1- horrible resource management2- no incentive to produce (US farm subsidies)2a- edible food units converted (at a net loss) into non-edible fuels2b- edible food units wasted to keep prices artificially high2c- arable soils not used for production or even intentionally spoiled.

Why? Capitalism has resulted in atrocious abuses by short-sighted goons. I think we have seen a derivation of corporatism

An accountant and an economist are walking in the park together. As they pass a pond they see a frog. The economist says to the accountant, "I'll pay you $40 to lick that frog." The accountant thinks about it for a moment, agrees to lick the frog, and the economist gives him his $40. As they continue, they see another frog, and the account says to the economist, "I'll pay you $40 to lick that frog." The economist agrees, licks the frog, and gets his $40. The accountant then says, "Well, what was the point of that? Now we've both licked a frog and have nothing to show for it!" The economist replies, "True, but the economy has seen an increase of $80!"

So, after a lot of reading, I've come to the conclusion that economists aren't very rational people.

An accountant and an economist are walking in the park together. As they pass a pond they see a frog. The economist says to the accountant, "I'll pay you $40 to lick that frog." The accountant thinks about it for a moment, agrees to lick the frog, and the economist gives him his $40. As they continue, they see another frog, and the account says to the economist, "I'll pay you $40 to lick that frog." The economist agrees, licks the frog, and gets his $40. The accountant then says, "Well, what was the point of that? Now we've both licked a frog and have nothing to show for it!" The economist replies, "True, but the economy has seen an increase of $80!"

The economy is not a zero-sum game. Even if both the economist and accountant are completely indifferent between paying or receiving $40 as the cost of licking a frog they valued the overall experience, e.g. the utility of having walked and licked frogs was greater than the utility of doing nothing regardless of the face value of the money that was equally exchanged. Otherwise they would have just sat in the park doing absolutely nothing.

An accountant and an economist are walking in the park together. As they pass a pond they see a frog. The economist says to the accountant, "I'll pay you $40 to lick that frog." The accountant thinks about it for a moment, agrees to lick the frog, and the economist gives him his $40. As they continue, they see another frog, and the account says to the economist, "I'll pay you $40 to lick that frog." The economist agrees, licks the frog, and gets his $40. The accountant then says, "Well, what was the point of that? Now we've both licked a frog and have nothing to show for it!" The economist replies, "True, but the economy has seen an increase of $80!"

So, after a lot of reading, I've come to the conclusion that economists aren't very rational people.

$80 worth of entertainment value has been added, the economist is right.

How are you going to give a 'universal basic income' to everyone without enslaving those who produce that wealth in the first place? They have a choice: until you send them to the inevitable gulags, they can say 'screw you' and stay at home instead of working.

People put up with taxes now. Why would removing the bureaucrats, regulations, and perverse incentives of the welfare state make them all decide to stop working?

More likely, people on the dole would start to be more productive when they no longer faced effective marginal tax rates greater than 100%.

I'm not sure if you meant this, but I know someone who doesn't work. Why? Because if they did they would loose there government funded housing. To make up the difference would require a great job. Now, do I expect that person to ever do a great job? No, but I think in this one case, if they were guaranteed a livable income, they might go find some little job for a little extra. I used to be way on one side, I'm much more open to the idea of listening to what people have to say. I don't know what the answer is, but I don't think America is doing great right now; whatever you attribute it to.

When people on assistance start working, they lose benefits often as fast, or faster, than the new money comes in - greater then 100% effective marginal tax rates. Makes no sense if you actually care about people. Makes plenty of sense to perpetuate the bureaucracy and put people on the voting plantation to keep it in power.

Yep. There's so many poverty traps in the way benefits are lost that it's basically impossible for anyone with two kids to ever make a financial case for joining the workforce without questionably high valuation of downstream wage increases. And not doing so, of course, absolutely guarantees poverty.

The immediate reaction is well scale this and scale that so that there's always marginal utility to working harder, but the patchwork of eligibilities and overlapping jurisdictions makes that darn near impossible to do adequately, and even attempting it an easily gamed bureaucratic nightmare.

Switzerland is usually a good place to look at how a society manages to reconcile libertarian ideals with communitarian practicality, and if I understand correctly the way they've squared this particular circle is that families are responsible for a person's welfare before the State steps in, and if you can assume a traditional family structure and a sense of shame in not being able to provide for yourself as is still a fairly good assumption in Switzerland, that reduces the problem down to the point where the burden on the public purse is not overly significant.

However, trying to follow that model in America would be rather problematic. If there's any sense of shame at all left in robbing your fellow citizens by means of government, it sure isn't evident anywhere.

No, it's one of the dumbest ideas I've seen spread across the Internet lately.

and modern capitalism's worst fear (how can you enslave those who have choice?), giving me two reasons to love it.

How are you going to give a 'universal basic income' to everyone without enslaving those who produce that wealth in the first place? They have a choice: until you send them to the inevitable gulags, they can say 'screw you' and stay at home instead of working.

I suppose you'd rather spend the money on these shiftless people via private industries taking the burden of under-performers, and pay for additional policing and prisons to deal with the people who aren't suited or willing to work to support themselves? That sounds like a much more economical solution. Oh right, taxes are being used to deal with those issues already.

Someone here has a sig about taxes being the price of civilization. There is a balance between Dane geld and social support. The people who aren't willing or able to fit into the normal molds of civilization are going to have a cost one way or another. I personally prefer a better method than letting them freeze or starve to death in the streets.

It's not new. Here in the Netherlands we have a system that provides for the bare necessities of life if you are fired. It works.

If the employees aren't constantly afraid they may get fired most do not work less. Most will work better. Fear is a really bad long term motivator. Employees who are afraid have bad concentration. They tend to focus on the possibility of unemployment.

When trying to get into the workforce in this economic climate I have been temporarily assigned at different companies. Some went through a rough spot (they expected that, that's why they only employed new workers on a temporary basis). If fear were a good motivator then people would have been working harder when the troubles became apparent, but that's not what I saw. The average efficiency of these engineers fell. Even with the securities that The Netherlands offer. It is hard to focus if you aren't sure about the future. Fear eats away at most people.

Then again, some people do not work if they can avoid it. But are they ever going to be good employees? Are they going to work more than they need to prevent getting fired? They'll feel like slaves. Living in fear, only working to prevent the repercussions of not working.

99% of the case, people will eventually bored and find something to do.

Sure. But will it be useful? Give me $2000/month and no social stigma, why shouldn't I just read and post to slashdot all day? I'll learn a lot, but won't be of much practical use. "Something to do" isn't the same as "something valuable".

Perhaps. I might do that for the first year, but then I'd be bored again.

The thing is, in a hypothetical future give everyone a living wage, with enough money to basically be the equivalent of today's middle class, but don't bar them from making money doing other things, if others find it valuable.

Though in the way this idea is commonly used, it says that we all will end up doing useful labor anyway, since we can't stand being idle. I find this absurd, though it might hold true for Americans, since we inherited a fair amount of our work ethic from our Protestant forebears. For the rest of the world? I'm sure they'd be content to sit on their butts, and spend time with their families.

Hell, I'm not even sure that I'd do anything useful. I might devote my full time to pastimes I love, or just sit on my ass eating cheetos and playing video games... Who knows?

Though in the way this idea is commonly used, it says that we all will end up doing useful labor anyway, since we can't stand being idle. I find this absurd, though it might hold true for Americans, since we inherited a fair amount of our work ethic from our Protestant forebears. For the rest of the world? I'm sure they'd be content to sit on their butts, and spend time with their families.

Actually, I find this comment fairly bigoted. My experience with the world is that no matter where you go there are slackers who don't want to do anything, and there are highly motivated people that do. The ratio of these varies a little from place to place, but not significantly.

In many highly socialised countries (looking at the Scandinavian countries for example), it is quite possible to just quit working and live (poorly, but acceptably) off the various benefits for the rest of your life. However, it

Yeah, no. See, as humanity progresses technologically, certain other parts of it have failed to keep pace. Law, for instance. Ethics, for one. I could go on.

One thing we do need to fix, as much as it pains me to say this (I really do not want to be on this planet), are the, ahem, education methods. I am not talking about the partisan bullshit about whether sex-ed gets taught that year, or whether religion is allowed in the classroom, or whether the teacher's union is (probably) robbing us blind. I'm talking

This is just plain stupid! Not just a bit, but quite a bit. How come I know? Because MY country Switzerland is right now trying to get enough signatures to have a vote. So being a good Swiss I decided to have a look at this model and ask, "can this really work?"

Answer is no. The idea itself is actually not bad. The reality of it is quite bad. What I decided to do was take three countries; Switzerland, Germany, and Canada and look at their current budgets. The idea is that if you have a basic income, then yo

Ok, I'm curious. Let's run the numbers for my home country - Australia. The total taxation rate of GDP is about 22% [tradingeconomics.com]; our GDP per capita is about $71k [wikipedia.org]. That's about $15k per person. The minimum cost of living in Australia is about $16k [mumsgone2aus.com] per person assuming for a typical family of four. The Mincome [wikipedia.org] experiment showed that people do not stop working on basic incomes, but in fact contribute to produce and to gain higher education. It could be quite possible to set the minimum income to be something like $7.5k per annum per capital (as many people will not need it, if paid a higher wage) and use remaining tax revenue to fund defence, infrastructure and health (which account for about half the budget). It does not appear to be outlandish to me. CAVET EMPTOR: this post and its figures were hastily researched using google and are probably deeply flawed and entirely wrong... but they're a starting point for facts-based discussion.

What's been happening here on the west coast of Canada where wages have been steadily dropping for the last 30 years is the housing is being sold to the Chinese. This keeps the housing high with lots of empty houses and only expensive large houses being built.With the price of housing being about 70% of pretax income, people have to illegally rent out rooms, basements etc to own and if you're a renter, well good luck finding something to rent and when you do, the price of rent keeps going up while wages dro

Oh, it's not just managers and deadwood/slackers... too many corporate departments have specialized and bloated-out unnecessarily (Note: at risk of being called troll, IT is admittedly included to an extent - depending on company/practices.)

We can start with "Human Resources" - I'm willing to wager that you can easily chop or outsource (to computer or external service) 90% of what an HR specialist does, and still run the company just fine. Seriously - how many effing times does one have to sit throu

You cant in US. HR is not to help you work more efficient. HR is there to shield corporation from LAWSUITS. They can point a finger and say 'mister X was reprimanded by HR for grabbing women asses and ejaculating into water cooler".

You cant in US. HR is not to help you work more efficient. HR is there to shield corporation from LAWSUITS. They can point a finger and say 'mister X was reprimanded by HR for grabbing women asses and ejaculating into water cooler".

Geez, what company do you work for? Around here, HR handles payroll, work permits/visas, arranges interviews, helps new hires move/settle in if needed, maintain personnel databases with vacations, sick days, etc. They are quite useful, and they do things that get in the way of en

There is a real need for dedicated IT staff.Especially if your building customers environments.

I'd hate to say it but I have seen this first hand. Firstly security is ignored, and secondly there has to e a level of over site.

Im a systems admin for a fortune 500 and in charge of security, you don't even know how many times "staff" have setup a replica of the customers environment and missed the security aspect or even forgot huge parts of the environment or even misconfigured half of it and we could not replicate bugs. My team goes in and notices this stuff off the bat.

There needs to be dedicated staff because core infrastructure should not be pieced together, It should be engineered, when not properly engineered and just thrown together based on what people want.... This usually ends up ina giant mess, which dedicated staff are called in to unravel and repair.

Sure, but don't be too sure of that. Having spent many years both in IT and as a consultant, I can tell you that most people have very little idea of how the structure of the company that employs them works, so "I don't see it" doesn't mean "it's not there."

I met another consultant at an ACM event who told me this story. His largest client hired him because they'd laid off an entire layer of middle management. The new CEO had come in, looked at the org chart and asked, "what do these people do?" Nobody k

They are not in the red, so it makes money. Also, as much as I love half-life and want to see it continue, I would rather wait years than see something like Call of Duty:Half Life edition.
That said, I still hold to the idea that Valve's trifecta of titles (Half-Life, L4D, and Portal), will initially be exclusive on a "Steam Box" console and doled out over a schedule in order to inflate initial adoption.

Isn't this how most companies work? In order to get anything done, you form an ad-hoc group of capable people to work on a project.

Seems to me the only difference is that in a normal company that group then has to figure out how to outflank the management hierarchy in order to complete the project, whereas this model skips that step.

The "bossless" part is just a bit of hyperbole. _Someone_ is going to be hiring and firing. It probably means it's not a strict hierarchical hand out of duties (which is actually pretty rare many places), but there's still someone involved with making sure that all the money being spent will lead to an actual product that gets released on time, even if that person isn't constantly applying pressure.

Of course you can be fired. No-one said otherwise, and obviously from the news it happens. There's a protocol for reviews and being let go.
Gabe is the owner of the company - of course he can't be fired. But aside from setting up the protocols and making some "ultimate" decisions, the actual day to day running of the company seems to operate in the "flat" way. It isn't hyperbole - its a totally different organizational structure.

Isn't this how most companies work? In order to get anything done, you form an ad-hoc group of capable people to work on a project. Seems to me the only difference is that in a normal company that group then has to figure out how to outflank the management hierarchy in order to complete the project, whereas this model skips that step.

The difference is that games don't really care much about the past or the future, what the prequel did and what the sequel might do is practically irrelevant, you build a new game, ship it, support it, scrap it. Meanwhile most other companies are working on version X+1 of their software that they'd like to upgrade from version X or X-1 and move in the right direction for X+2 with most code surviving from one version to another, upgrade paths and existing behavior must be preserved and so on. Yes you still h

WL Gore & Associates, which makes Gore-tex and applies the similar technology across dozens of other industries from medical devices to space suits and military gear, also operates as a (very successful) Theory Y organization.

If you think about how they describe pushing out people that "don't fit" by group consensus, you quickly begin to see how such a workplace is actually fairly toxic. Everyone would be trying hard to get along and not piss anyone off, because, like on the reality show Survivor, once the team gets a bug in their bonnet for you, you're gone, despite your productivity or ethics. It also leads to monocultures - people will want to hire and work with people like them, the complete opposite of diversity hiring. I would be interested to see the cultural vectors for Valve. I'm betting they don't have a lot of ethnic minorities or women working there.

Yes, that's the impression I get from these types of organizations. They have the freedom to choose and eliminate the members of their "tribe", so it can only work in artificial environments. I suspect this model can't work in other more competitive industries. Imagine trying to order a meal in a restaurant being run this way. It would go out of business before you finish the cheese course.

Q: If all this stuff has worked well for us, why doesn’t every companywork this way?

A: Well, it’s really hard. Mainly because, from day one, it requires acommitment to hiring in a way that’s very different from the way mostcompanies hire. It also requires the discipline to make the design ofthe company more important than any one short-term business goal.And it requires a great deal of freedom from outside pressure—beingself-funded was key. And having a founder who was confident enoughto build this kind of place is rare, indeed.

Another reason that it’s hard to run a company this way is that itrequires vigilance. It’s a one-way trip if the core values change, andmaintaining them requires the full commitment of everyone—especially those who’ve been here the longest. For “senior” peopleat most companies, accumulating more power and/or money overtime happens by adopting a more hierarchical culture.

Eventually, the folks working at Valve will end up getting married, buying houses, having kids, etc. etc. and will realize that their income in this communal culture is hardly enough. At that time, they will either leave for other (traditional) companies where performance is rewarded with better pay and better positions,

If this is truly just about the money what's to stop Valve from giving bonuses based on merit or incremental pay increases for seniority? Experience is worth money, too. It's not a requirement they have to move up into any sort of supervisory position to be rewarded financially for working hard and showing dedication to their company. The idea that everyone in a certain position should be paid the same range is very hierarchical itself. I suspect it was formed by the same middle-management types getting butt-hurt over the idea that someone in a position "below" them was making more money than they were, completely ignoring whether the engineers have to work harder or make a greater or less contribution to the company overall.

The long answer is probably no, as you need a certain mix of incredibly talented people with very specific attributes. Valve is notorious for only hiring the absolute best, going for those with wide specialist knowledge (but shallow knowledge of all other aspects of game development... some kind of "T" metaphor is used by them?), and ensuring everyone they hire can be an effective leader/is capable of following an effective leader when needs be. And you can't just have a few people with those attributes; everyone in the company has to be like that.

If you can hire only people that meet the above qualifications, then sure, you could make another Valve. But it's a very difficult (or at least expensive) proposition, and no doubt incredibly challenging to scale.

If you have the right kind of people, namely competent, motivated, result oriented professionals, that do not care one bit for power, but are willing to assume it temporarily in order to take responsibility for a specific part of a project (only to relinquish it freely afterwards), then this works very well indeed.

The two reasons for people to go into management are absent here1. Incompetence: Doing management is often a way for people that have no real skills with regard to the product being made to join or stay in an organization.2. Lust for power: The other primary motivation for going into management is wanting to tell others what to do.

In bad managers (the predominant type), both things combine. Good engineers, artists, writers, etc. almost universally want to practice their craft and get better at it. Doing any management-like function is something they will only do willingly (and temporarily) for the greater good and never as their sole function. If you have such a pool of people, the only permanent (but critical) management function to remain is to make sure nobody incompetent at or not passionate for their (non-management) job and nobody with lust for power joins the team. People that are passionate about what they do are easy to identify. Skill is harder, but doable if you invest some time to find out. Lust for power is still harder, but people that have gotten good as their primary competency rarely have it as it gets into the way.

This also means that most companies cannot use this model, as they have been taken over a long time ago with those of no valuable skills and/or a craving for power and, from my observation, usually have quite a few incompetent non-managers in addition.

The two reasons for people to go into management are absent here
1. Incompetence: Doing management is often a way for people that have no real skills with regard to the product being made to join or stay in an organization.
2. Lust for power: The other primary motivation for going into management is wanting to tell others what to do.

In bad managers (the predominant type), both things combine. Good engineers, artists, writers, etc. almost universally want to practice their craft and get better at it. Doing any management-like function is something they will only do willingly (and temporarily) for the greater good and never as their sole function. If you have such a pool of people, the only permanent (but critical) management function to remain is to make sure nobody incompetent at or not passionate for their (non-management) job and nobody with lust for power joins the team. People that are passionate about what they do are easy to identify. Skill is harder, but doable if you invest some time to find out. Lust for power is still harder, but people that have gotten good as their primary competency rarely have it as it gets into the way.

This also means that most companies cannot use this model, as they have been taken over a long time ago with those of no valuable skills and/or a craving for power and, from my observation, usually have quite a few incompetent non-managers in addition.

I submit that the most common reason why technical people go into management is not listed. That is: HR puts an arbitrary cap on what technical people can make and it is less than what managers make. In order to progress in your career and make more money, you have to go into management, and therefor remove yourself from the productivity pool. It seems counter-intuitive, but most everything that companies do is counter-intuitive.

Honestly, it's the back edge of the proverbial double-edged sword of promoting "hiring from within". If your company really feels (as most do) that the people already working in a business know more about it than outsiders, the only viable option becomes promoting technical people to management positions.

If the financial motivator (of a nice pay raise for becoming management) wasn't in place, though, a lot of the technical people would refuse to switch roles to management -- because hey, why sto

There is another reason for going into management. Apparently there is considerable 'ageism' out there in the tech industry. If you don't have management experience by a certain age, you end up getting sidelined because the non-tech people tend to hire younger developers for development positions (This seems to be the position I find myself in at the moment). Younger developers are seen as more exploitable (longer hours, less pay, no benefits etc) over more experienced employees who will expect to command higher wages.

My experience is that people don't show up on day one knowing exactly what needs to be done. Someone has to keep track of which parts of the project need to be done. That "someone" who keeps track of things is a project MANAGER. A skilled, experienced tech in that role is good. They are more valuable managing the project than writing code. To get me to take on that stress, you have to pay me more. That's two reasons why I do management - because it has to be done and someone is willing to pay me more to manage coders than to be a coder.

Within a decent sized project, you'll have less experienced or less knowledgeable people. They'll need some management by more knowledgeable people guiding them. As much as I would like to just code all day, SOMEONE has to point out to the new person that copying and pasting the same code in six different places causes problems.

While the project manager is busy with the $800,000 project, someone elese has to think acout how that fits into the organization's $12million total budget and the five year plan. Otherwise, you may win the battle but lose the war, you may succeed at doing the wrong things. Your best and brightest people are a lot more valuable making five-year and ten-year $xx million decisions than having the best people writing "while" loops. I prefer to just work on algorithms, but someone needs to plan for what happens when this three-year contract is over.

It's not a power trip. It's a job someone needs to do. Heck, most of the management I do now is for a non-profit where I don't get paid and the managing board resented by those too lazy/apathetic to take on any responsibilities themselves. I do it simply because it needs to be done, or the organization would fail in it's mission.

Have you ever worked for a Fortune 500 company, or any company with more than 10k employees spread across several states?

Most companies adopt pay grades, and assign certain pay grades to certain job titles. This is your base salary range, which is then adjusted by the cost of living for your location. You have to make at least the minimum of the range, and can never make more than the maximum. The only way to go up once you've capped out, is to get a new job title (ie, promotion).

When a company is faced with a large number of employees, that becomes the easiest way to make sure people are being paid fairly across the board. It doesn't matter what race, gender, ethnicity, etc, you are; if you are Job Title A at Pay Grade 15, you will always be making between $x and $y.

I'm not saying it's the best solution, but it is dead simple, easy to implement and about as bullet-proof from lawsuits as you can get. Could they come up with something better? Most likely. But if this works, why spend time and effort on something that may not (at the same time opening you up to discriminatory salary lawsuits)?

Anyway, none of that is an argument FOR the practice, just an explanation of why it exists.

If you read Varoufakis essay pointed to there, he'll note that Valve's own management doesn't believe the company will be able to scale. More importantly, he notes that the employment process is self-selecting, and that's the rub. I found a Forbes article [forbes.com] which estimates that Google makes a profit of 350k per head, while Valve's is in the 87.5 million per head -- that's an estimate, but even if it's one twentieth, it's still ridiculous. Valve is in a unique position due to steam -- its a publishing house which effectively monopolizes PC digital distribution. They roll in so much money that they can run the company as an anarcho-syndicalist commune, a democracy, or by pulling suggestions out of a hat. They're very lucky that way and rolled the dice well -- most game studios pushing for artistic integrity have ended up as EA subdivisions for a good reason.

Running a real company or a real government requires dealing with people who don't want to be there. Not everybody wants a career, some people just want jobs. They want to punch the clock and go home. Some people steal habitually from the till. Had I my druthers, I'd spend all day at home reading, and I'm considered a sociopathic workaholic. Some people are going to cheat. Some people are going to lie on their interviews. The test of any organization isn't how it does when it's doing well, it's how it does when its under extreme stress. Valve hasn't been under extreme stress, so the question of the effectiveness of their organization is effectively mooted. We can look to other game companies with strong egos (Origin for example, or Ion Storm) and get a good idea, though.

I have never figured out why a company would want to a) hire people who didn't want to work there, b) not fire them as soon as that became obvious, and c) try their very best to make all employees, whether they want to be there or not, work as hard as possible by treating them like children.

Most corporate structure seems to be set up with unruly serfs in mind.

I found a Forbes article [forbes.com] which estimates that Google makes a profit of 350k per head, while Valve's is in the 87.5 million per head...

No, that's not right. Read the article again. " More specifically, Newell says of the 250-person company that on a per-employee basis, Valve is more profitable than tech giants like Google and Apple. Google made an average $350,000 in profits per employee in 2010. That means Valve sees profits of around $87.5 million at least." The $87.5 million number is total profit, not per employee.

The claim that there are "no bosses" is complete rubbish. There has to be a few people in charge who make decisions and act as the final authority when a group of people cannot agree about something. Otherwise, nothing would ever get done due to the fact that people are horribly imperfect.

Should we hire this person? What if the "group consensus" is that they don't like him because of his race? Who's going to tell them thats illegal?Do we need to buy some new servers? What should we buy? How much should we charge for this latest game?

Somebody has to make those decisions. And a few million more. They might not actually have a job title with "boss" or "manager" in it, but they are still bosses and managers.

"nothing would ever get done due to the fact that people are horribly imperfect"

So you solve this by putting one imperfect person in charge?

The whole idea of Valves management is that people are imperfect so the best thing is not to put anyone in charge. People will tend to work on what interests them and seems like it will have some success. Have you ever been stuck working on a project that you knew was going nowhere and was doomed to get canceled? How much time and money was wasted while waiting for mana

So while my answer might seem quite pessimistic, I think, and sadly, it is true because much like Communism it works fine on paper but almost never in practice and happily Valve has found one of those rare exceptions in time when it does.

Quite an interesting comparation because then, how is it that the vast majority of companies are governed by Communism, just the Soviet Russia style?

It's an interesting comparison because the basic idea behind communism was that fundamentally the same as that behind Theory Y style organisations. The idea, that is, that left to their own devices, without the imposition of formal authority (remember that in theory 'communism' was to be a stateless and non-hierarchical society), humans will be self-motivated and express themselves by what they produce. You will recall from your reading of Marx, that one of the great criticisms communists levelled at capitalist production methods (Taylorism), is that the assembly line robbed the factory worker of their human identity by 'alienating' them from the products of their own labour. For Marx you are what you make.

just the Soviet Russia style?

OP wrote about "Communism on paper," so a comparison with Soviet Russia (which never claimed to have a communist system in place anyway) is a little unfair. I do agree, however, that the human management in the Soviet state seems to have a more in common (and if I understand it this is your point) with that in the majority of modern corporations, than with this self-motivated pride in one's own work approach.

Valve has been in the unique position of having some hit titles in the past that they had good publishing deals on. That's given them the financial cushion to run things however they wanted with whomever they wanted, without any of those pesky obligations most developers have to meet to pay the bills. And then of course they stumbled onto Steam, the patching platform turned online store where they get a cut of all the other developers profits.

To highlight a similar scenario, 3D Realms was able to dick around for almost 15 years (1996-2009) thanks to the big pot of cash they had from the first Duke 3D game and a few farmed out expansions. We know for sure now that those years where not spent under some masterful system of management creating the most polished game ever, they where terribly managed years in which the same game was reinvented every 4-6 months everytime Broussard saw a new game.

Valve management is certainly not the disaster that was 3D Realms, but at the same time it's very hard to apply their near-zero management style without also having access to their near-zero financial obligations. Valve can afford to mess around in the kitchen for years tossing meal after meal into the garbage until they have something they like. Other developers have to feed their family tonight.

So I guess what I'm saying is that regardless of whether the bossless model works for Valve, other companies have to actually produce games on time and on budget. Where exactly is Half Life 3...

Valve hires incredibly self-motivated and talented people. Most people are *NOT* incredibly self-motivated so taking Valve as a role model for the rest of workplace environments is utter foolishness. As the late and famous physicist Einstein once eluded to, the only thing larger than the universe is human stupidity, that's what you're drawing from if you try to think "big picture". So um, no.

I mean it works for a tomato company in Florida (Morning Star), it can work for just about anything, but it takes a lot of time to cultivate the culture, and you've got to have the right people initially for it to work.

Although I have some political differences with Russ Roberts, I'm a fan of his podcast. The guests and the discussion are usually interesting (this guy included).

One thing that drives me nuts though, is Robert's eagerness to call anything that's not obviously a top-down process 'Hayekian'. If Roberts had his way, people would try to get their video to 'go Hayek' to support their 'Hayek-starter' project about 'Hayek-oriented programming'.

There's an entire business model based on operating a business with no boss -- it's called [nytimes.com] a worker [wikipedia.org] cooperative [usworker.coop]. As a founder and member of one, and a friend of dozens more, I'm here to say that it works.

The existence of one bossless model makes it easy to believe that others could exist. The presence of an authority figure, or of any kind of hierarchy, is not a requirement for business success. This isn't speculation -- there's proof in black and white.

The software devs at Valve have an genuine desire to make games. Hell, most of them probably make games *they* want to play. They fact that they get paid to do so, and that the rest of us get to play them too is all bonus. They certainly don't need a boss telling them to do more of it. So for them, the lack of direct leadership works.

I can't see the same method working for wage-slave type positions, or jobs without distinct landmarks and end goals. An IT call center worker or retail worker probably has no real motivation to come back from lunch and get to work. No real reason to spend all day working instead of slacking of browsing slashdot, or just dicking around on your phone. So what, they answered 10 calls instead of 20, or helped a few less customers find what they were looking for in housewares. Without a boss to "crack the whip," can't see a lot getting done in those types of jobs.

The problem is that everything after Half Life 2 Episode 2 is not a Valve game, they were indie games that pitched their idea and got funding from Valve. So that puts the last actual in house developed game by Valve around 2005.